Newsletter – July 2018

US technology stocks, such as the well-known FAANGs (Facebook, Apple, Amazon, Netflix & Google), have grown in value enormously over recent years and driven the US stock market indexes, the S&P 500 & Nasdaq, to record levels. However, disappointing quarterly updates from Facebook and Twitter saw their share prices fall around 20% last week so this raises an important question for investors.

Is the rally in US technology stocks over and will this see the broader US market move lower? It is not possible to answer this definitively but these big falls highlight again how market “darlings” trading at high multiples are vulnerable if their strong growth in customers and profitability moderates. This clearly has the potential to impact investor sentiment and could provide a catalyst for a broader US market correction that seems overdue. Except for aggressive investors, caution seems appropriate before adding to existing riskier investments in this environment.

My Health Records – why I plan to opt out

While I understand the potential benefits of the Federal Government’s My Health Record digital system, designed to allow health care practitioners nationally to share patient details and improve health outcomes, I will be opting out due to privacy concerns and the potential for abuse.

The former head of the Government’s Digital Transformation Office said if he were an Australian citizen he would opt out because of the potential for the system to be hacked, as have several politicians from both sides. Hacking of Government systems has recently happened with the Australian census, as we know, and in other countries such as Singapore and the USA.

The clinical benefits of implementing the My Health Records system are also being questioned because there are no guarantees that the information will be accurate, complete or current. This has caused many doctors to question the usefulness of the system. There is no capability with the system to track who has accessed your information or why. Not only doctors but nurses and administrators can access the records and doctors tell me that it is common for hospital staff to access health records using someone else’s log in.

Potential access by third parties, such as the tax office and police, and possibly even commercial interests like health funds, is another reason I will be opting out.

If you are not concerned with your Health records being available to thousands of health care staff and see the benefits of the system, there’s nothing you need to do and your record will be created.

For those who, like me, choose to opt out, the process is very simple and takes about 1 minute completing an online form that requires your Medicare card number and ID, such as Driver’s License or passport number. Simply Google Opt out of My Health Record before 15th October and complete the short form. If you cancel your My Health Record, healthcare providers such as your doctors may (and probably will) keep copies of any records they have uploaded to the My Health Record system stored in their own record-keeping systems.

Something unusual – US interest rates above Australian rates

Over the past 30 years Australian interest rates have consistently been higher than their US equivalents, as can be seen in this chart, but that’s no longer true. The strong growth in the US economy coupled with rising inflationary expectations and a central bank, the Fed, raising official interest rates has resulted in both short (2 year) and long (10 year) US bonds trading at levels above Australia. With little likelihood of Australian rates rising in the near term, this historically unusual situation is likely to persist for some time.

The significance of this is debateable but it does highlight how US economic growth is stronger than Australia’ s (and other developed economies) and just how low our interest rates remain. At some point you would expect Australian rates to rise but any significant rise seems unlikely in the next year so that’s arguably good news for borrowers and bad news for those with Term Deposits and similar investments.

How to find out if the airbag in your car is safe or needs replacing

Several million Australian vehicles have faulty Takata airbags that should be replaced. To find out if the airbag in your vehicle needs replacing go to the website IsMyAirbagSafe.com.au

All you need to do is type in your car’s number plate and you’ll have the answer.

This newsletter contains general advice. It does not take into account your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.